Labour-market database for South Africa with HIV/AIDS detail

This paper describes the construction of a database that underlies the labour supply module developed for South Africa, with a specific focus on HIV/AIDS. The labour supply theory imposes a stock/flow dynamic mechanism on labour market groups distinguished by labour market activity, age, gender, race, and HIV status/stage. Broadly, the theory specifies that at the start of year t, people aged 15-65 (the working age population, hereafter the WAP) are divided into categories based on common characteristics. These characteristics are age, gender, race, HIV status/stage and labour-market activity undertaken in year t-1. People in categories offer their labour services to activities performed during year t. At the end of year t, people still part of the WAP progress one year in age and may change their HIV status/stage. Some people leave the WAP due to retirement or death. After this transition, people are again grouped into categories, based on common characteristics. The process of labour supply from a category to an activity is then repeated. For the implementation of this theory, we need to create a database that contains matrices that form the initial solution of the model. Three characteristics of this database are noted: (1) it contains detailed information regarding the structure of the WAP in the base year (2002); (2) it includes a transition matrix that allows adults to change their age and HIV stage between year t-1 and year t and (3) it includes matrices describing the flow of adults from categories to activities. This paper is organised in three parts. The first part describes the construction of the activities matrix in the base year. The activities matrix describes the number of people in each labour-market activity by age, gender, race and HIV stage. The second part of this paper explains the construction of the categories matrix and the flow matrices. The categories matrix shows the number of people in each labour-market activity by age, gender, race and HIV stage at the start of the year. The flow matrices show the number of people by age, gender, race and HIV stage, moving from a labour-market category to an activity. The third part of the paper describes the construction of the transition matrix. This matrix allows people in each labour-market activity, given their gender and race, to change their age from to and change their HIV stage from to .